China’s minimum wage hits record revenue in 2021, boosted by global chip shortage

A logo of Semiconductor Manufacturing International Corporation (SMIC) is seen at the China International Semiconductor Expo (IC China 2020) following the coronavirus disease (COVID-19) outbreak in Shanghai, China October 14, 2020. REUTERS/Aly Song

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SHANGHAI, Feb 11 (Reuters) – Business boomed last year for Chinese chipmaker Semiconductor Manufacturing International Corp (0981.HK) (SMIC) due to a global chip shortage, with revenue and profit up despite pressure from U.S. sanctions, he said. .

Sales for calendar year 2021 rose 39% on the year to a record $5.4 billion, propelled by global demand, the company said in an annual financial report released Thursday.

Refinitiv data showed it was the strongest annual revenue growth for the company since 2010.

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“The global chip shortage and strong demand for local and indigenous manufacturing have presented our company with a rare opportunity,” Guo Guangli, secretary of the board, said in an earnings call on Friday.

Operating profit for the year reached $1.4 billion, about four times more than in 2020.

SMIC, which manufactures physical computer chips based on the designs of other companies, has a small share of the chip manufacturing sector, which is dominated by Taiwan Semiconductor Manufacturing Co Ltd.

But it is the largest and most advanced fab in mainland China, thanks in part to support from the government, which sees semiconductor manufacturing as key to efforts to foster an advanced, indigenous chip industry.

Sales skyrocketed in 2021 after a global chip shortage that began in late 2020 drove up prices and led to increased orders.

That year, the Shanghai-based company said it would build three new factories in Beijing, the capital, as well as southern Shenzhen and its hometown, at a cost of billions of dollars each. .

On the earnings call, Guo said SMIC plans to open the Shanghai plant in early 2022 and its Beijing and Shenzhen plants by the end of the year.

The company continues to expand despite US sanctions that have shaken its plans to get into high-end chip manufacturing.

In late 2020, Washington put SMIC on the Commerce Department’s Entity List because of its ties to the Chinese military, requiring US-based vendors to obtain licenses to do business with the company. SMIC denied having such links.

Dutch lithography machine maker ASML Holding NV (ASML.AS) said it had not yet received approval to ship to SMIC the extreme ultraviolet (EUV) lithography machines needed to make the chips more advanced.

On Friday, company officials told investors that orders from SMIC suppliers are still taking a long time to fill due to the restrictions.

The company also saw changes in its executive leadership as the sanctions and shortage unfolded.

In November, Chiang Shang-yi resigned as vice president about a year after joining the company, along with three board members.

Two months earlier, SMIC chairman Zhou Zixue had also resigned, citing health reasons.

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Reporting by Josh Horwitz; Editing by Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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